Case: 22-1377 Document: 44 Page: 1 Filed: 02/17/2023
United States Court of Appeals
for the Federal Circuit
______________________
INDIANA MUNICIPAL POWER AGENCY,
MISSOURI JOINT MUNICIPAL ELECTRIC
UTILITY COMMISSION, NORTHERN ILLINOIS
MUNICIPAL POWER AGENCY, AMERICAN
MUNICIPAL POWER, INC., ILLINOIS MUNICIPAL
ELECTRIC AGENCY, KENTUCKY MUNICIPAL
POWER AGENCY,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant-Appellee
______________________
2022-1377
______________________
Appeal from the United States Court of Federal Claims
in No. 1:20-cv-02038-RAH, Judge Richard A. Hertling.
______________________
Decided: February 17, 2023
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PEGGY A. WHIPPLE, Healy Law Offices, LLC, Spring-
field, MO, argued for plaintiffs-appellants. Also repre-
sented by DOUGLAS HEALY; JOHN C. HAYES, JR., BRIAN J.
WHITTAKER, Nixon Peabody LLP, Washington, DC.
STEVEN MICHAEL MAGER, Commercial Litigation
Branch, Civil Division, United States Department of
Case: 22-1377 Document: 44 Page: 2 Filed: 02/17/2023
2 INDIANA MUNICIPAL POWER AGENCY v. US
Justice, Washington, DC, argued for defendant-appellee.
Also represented by BRIAN M. BOYNTON, ERIC P. BRUSKIN,
PATRICIA M. MCCARTHY.
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Before PROST, REYNA, and HUGHES, Circuit Judges.
HUGHES, Circuit Judge.
On appeal is the Court of Federal Claims’ judgment
that sequestration applies to reduce government payments
for Build America Bonds and that Appellants do not have
a contractual right to these payments. We affirm and adopt
the trial court’s reasoning.
I
Congress passed the American Recovery and Reinvest-
ment Act of 2009 (ARRA) to stabilize the U.S. economy in
the wake of the 2008 financial crisis. Pub. L. No. 111-5, 123
Stat. 115 (2009). Section 1531 of the ARRA created two
types of government-subsidized bonds called Build Amer-
ica Bonds (BABs). § 1531, 123 Stat. at 358–360.
The type of bonds at issue, “Direct Payment BABs,” en-
titled bond issuers to a tax refund from the U.S. Depart-
ment of the Treasury (“Treasury”) equal to 35 percent of
the interest paid on their BABs. Treasury annually pays
issuers of BABs upon receiving a timely Form 8038-CP
filed by the issuers. I.R.S. Notice 2009-26, § 3.1. The pay-
ments are funded by the permanent, indefinite appropria-
tion for refunds of internal revenue collections. 31 U.S.C. §
1324 (providing for the appropriation of “[n]ecessary
amounts . . . for refunding internal revenue collections”).
Appellants are a group of local power agencies that col-
lectively issued over four billion dollars in qualifying Direct
Payment BABs before January 1, 2011. From January
2010 through the end of 2012, Treasury paid the full 35
percent of the bonds’ interest payments.
Case: 22-1377 Document: 44 Page: 3 Filed: 02/17/2023
INDIANA MUNICIPAL POWER AGENCY v. US 3
In 2011 and 2013, Congress passed legislation reviving
sequestration: “[T]he cancellation of budgetary resources
provided by discretionary appropriations or direct spend-
ing law.” 2 U.S.C. §§ 900(c)(2), 901(a); see Budget Control
Act, Pub. L. No. 112-25, 125 Stat. 240 (2011); American
Taxpayer Relief Act of 2012, Pub. L. No. 112-240, 126 Stat.
2313 (2013). Pursuant to this sequestration legislation,
Treasury stopped making payments to Appellants at the
rate of 35 percent. Instead, since 2013, Appellants have
been paid the reduced rates as determined by the Office of
Management and Budget’s sequestration calculations. For
example, 2013 payments were reduced from 35 percent to
8.7 percent in accordance with the 2013 sequestration rate.
On December 30, 2020, Appellants filed a complaint
with the Court of Federal Claims, which was later
amended. The amended complaint seeks the full 35 percent
of interest payments for 2013–2030 1 under two theories: (1)
a statutory theory that the Government violates § 1531 of
the ARRA by not making the full 35 percent payments, and
(2) a contractual theory that the Government has breached
a contract that arises out of § 1531. The Government moved
to dismiss for failure to state a claim, and the Court of Fed-
eral Claims agreed that (1) no statutory claim existed be-
cause sequestration applied to these payments, and (2) no
contractual claim existed because the ARRA did not create
a contract between the government and Appellants.
Appellants filed a motion for reconsideration, which
was denied. They now appeal the order granting the Gov-
ernment’s motion to dismiss and the order denying recon-
sideration. We have jurisdiction under 28 U.S.C.
§ 1295(a)(3).
1 Plaintiffs’ amended complaint seeks payments
through 2030 because sequestration has been extended
through that date. J.A. 4–5.
Case: 22-1377 Document: 44 Page: 4 Filed: 02/17/2023
4 INDIANA MUNICIPAL POWER AGENCY v. US
II
We review the Court of Federal Claims’ dismissal for
failure to state a claim and issues of statutory interpreta-
tion de novo. Turping v. United States, 913 F.3d 1060, 1064
(Fed. Cir. 2019); Genentech, Inc. v. Immunex R.I. Corp., 964
F.3d 1109, 1111 (Fed. Cir. 2020). We review the Court of
Federal Claims’ denial for reconsideration for abuse of dis-
cretion. Entergy Nuclear FitzPatrick, LLC v. United States,
711 F.3d 1382, 1386 (Fed. Cir. 2013).
III
Having considered all of Appellants’ arguments, we
find no basis to overturn the decision of the trial court and
agree with the trial court’s well-reasoned analysis. As for
Appellants’ statutory claim, we agree that sequestration
applies to Direct Payment BABs because these payments
are issued from the permanent, indefinite appropriation
provided by 31 U.S.C. § 1324, which constitutes direct
spending. As for Appellants’ contractual claim, we agree
that Appellants did not plead the elements of a contract
because they rely solely on a statutory provision that does
not create a government contract.
We therefore affirm the trial court’s judgment and
adopt its published opinions 2 as our own.
AFFIRMED
2 Ind. Mun. Power Agency v. United States, 154 Fed.
Cl. 752 (2021); Ind. Mun. Power Agency v. United States,
156 Fed. Cl. 744 (2021).